Overall, the consequences in short-term trading, which is Next Kraftwerke’s main area of work, are not as serious as in long-term trading. The heavy drop in fossil fuel prices has a severe impact here; hard coal prices plunged by about 25 percent and oil prices by about 30 percent. Long-term contracts with terms that are based on long-term forecasts of raw material price developments cannot be maintained as a result of this drop in prices. The collapse in oil prices is directly noticeable at the pump; price slumps of comparable magnitude, albeit less severe, were last observed during the global financial crisis in 2008 - gas prices will also fall sharply with a time lag.
Negative control energy in strong demand
The enormous decline in electricity consumption also shows clearly on the balancing energy market. For example, the price for negative secondary and minute reserve power rose sharply last weekend, as grid operators had to withdraw surplus power from the grid by using large quantities of negative secondary control power (or Automatic Frequency Restoration Reserve, aFRR) and tertiary reserve power (or Manual Frequency Restoration Reserve, mFRR).
Normal power prices for negative aFRR and mFRR are in the single-digit euro range - on Saturday (21 March 2020), however, prices initially rose to 20 euros per MW, and then on Sunday to a record of 80 euros/MW. The grid operators bought large amounts of negative control energy for the expected drop in electricity consumption on Monday.